Q3 2024 Presto Automation Inc Earnings Call

May 22, 2024

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Operator: Greetings and welcome to Presto's financial third quarter 2024 earnings call. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Chris Kass. You may begin. Good afternoon.

Greetings and welcome to.

Financial third quarter 2024 earnings call.

Speaker Change: This conference is being recorded it is now my pleasure to introduce your host Chris Katz you may begin.

Chris Kass: Good afternoon, everyone. I'd like to welcome all of you to Presto's fiscal third quarter 2024 earnings call. Today's call will include prepared remarks from our Interim Chief Executive Officer, Guillaume Lefevre, and our Interim Chief Financial Officer, Stanley Mbugua. After these prepared remarks, we will open the call for questions. A recording of this call will be made available, and information to access the recording is listed in the press.

Speaker Change: Good afternoon, everyone I'd like to welcome all of you to press those fiscal third quarter 2024 earnings call.

Speaker Change: Today's call will include prepared remarks from our interim Chief Executive Officer, and our interim Chief Financial Officer Stanley Mbugua.

Speaker Change: After these prepared remarks, we will open the call for questions and recording of this call will be made available and information to access the accordion is listed in the press release.

Chris Kass: Before we begin, I'd like to remind everyone that during today's call, we will be making forward-looking statements regarding future events and financial performance, including our guidance for Presto's fiscal fourth quarter of 2021. These forward-looking statements are subject to known and unknown risks and uncertainties, and cautions that these statements are not guarantees of. We encourage you to review our most recent reports or any applicable filings for a complete discussion of these factors and other risks that may affect our future results or the market price of our stock.

Speaker Change: Before we begin I'd.

Speaker Change: Like to remind everyone that during today's call, we will be making forward looking statements regarding future events and financial performance, including our guidance for presses fiscal fourth quarter of 2020 for these.

Speaker Change: These forward looking statements are subject to known and unknown risks and uncertainties.

Speaker Change: <unk> cautions that these statements are not guarantees of future performance.

Speaker Change: We encourage you to review our most recent reports or any applicable filings for a complete discussion of these factors and other risks that may affect our future results or the market price of our stock.

Chris Kass: Finally, we are not obligating ourselves to revise the results or these forward-looking statements in light of new information or future events. Also, during today's call, we will refer to certain non-GAAP financial measures; reconciliations of non-GAAP to GAAP measures, and certain additional information are included in the press release. This press release can be viewed and downloaded from our website.

Speaker Change: Finally, we're not obligating ourselves to revise our results or these forward looking statements in light of new information or future events.

Speaker Change: Also during today's call, we will refer to certain non-GAAP financial measures reconciliations of non-GAAP to GAAP measures and certain additional information are included in the press release.

Speaker Change: This press release can be viewed and downloaded from our website.

Guillaume Lefevre: Thank you Chris for the introduction and thank you everyone for joining the call. It's my pleasure to speak to you today for the first time as the CEO of Presto. While I only assumed this role a little over three months ago, I've been working with Presto in a variety of capacities for over a year and have therefore already had deep experience of the company and its potential. By way of some brief background, I have extensive experience working with some of the world's largest restaurant chains on commercial and operational issues.

Speaker Change: Thank you Chris for the introduction and thank you everyone for joining the call.

Speaker Change: It's my pleasure to speak to you today is the first time.

Speaker Change: Good day.

Speaker Change: While I only assume this role at it lag of three months ago, I've been working with Presto and a variety of capacities.

Speaker Change: And therefore already has deep experience to the company and its potential.

Guillaume Lefevre: And so I have a deep understanding of what matters to our customers. My personal focus will always skew to the customer, commercial, and strategic elements of this business, while I will work closely with our excellent engineering, product, and operational leaders to deliver in those areas. In this, my first earnings school, I wanted to spend a majority of the time updating you all on the business and operational progress we have made since I assumed my role, which includes some new approaches and how these initiatives position us for the future.

Speaker Change: By way of can be brief background I have extensive experience working with some of the world's largest restaurant chains on commercial and operational issues and so I have a deep understanding of what matters to our customers.

Speaker Change: My personal focus will always use the customer commercial and strategic elements of this business, while I will work closely with our excellent engineering product and operational leaders are different in those areas.

Nick: And Nick My first earnings call I wanted to spend the majority of the time updating you all on the business and operational progress. We have made since I assumed my role, which includes some new approaches and how these initiatives position us for the future.

Guillaume Lefevre: First, however, I need to review Presto's current financial statements. We recently made several public statements relating to our plans for the coming months in relation to financing and wish to address and recap these before moving on to the business itself. On May 20th, 2024, we completed a financing of $3 million in common equity and subordinated debt from various parties, including our existing investor, Remus Capital. In conjunction with this financing, Presto's Principal Senior Secured Lender, Metropolitan Partners, agreed to extend forbearance with respect to existing defaults under the company's credit facility until June 15th, 2021.

Nick: First however, I need to review <unk> current financial condition.

We recently made several public statements relating to our plans for the coming months in relation to financing I wish to address and recap these before moving on to the business itself.

Nick: On May 22024, we completed a financing of $3 million in common equity and subordinated debt from various parties, including our existing investor <unk> capital.

Nick: In conjunction with this financing prestige principal senior secured lender metropolitan part as great a great to extend forbearance with respect to existing defaults under the Companys credit facility until June 15th 2024.

Guillaume Lefevre: The capital raised, together with cash on hand and projected revenues, is expected to be sufficient to finance the company through June 15th, 2024. Metropolitan has agreed to further extend forbearance until July 15 2024 if the company raises $3 million in additional equity by June 7 this year.

Nick: The capital raise raised together with cash on hand, and projected revenues is expected to be sufficient to finance the company through June 15 2024.

Nick: Metropolitan has agreed to further extend forbearance until July 15th 24, if the company raised its $3 million in additional equity by June seven midyear.

Guillaume Lefevre: Crucially, during this forbearance period, Metropolitan has agreed to negotiate in good faith to complete an agreement to transfer its debt position to a new lender in consideration for $20 million and evidence of a minimum of $12 million of operating capital in the company. Metropolitan will also receive convertible notes in the company. If a transfer of the debt is not completed or the forbearance is otherwise terminated, the company has agreed to cooperate with Metropolitan as it explores its other financial alternatives, including seeking new investors or M&A options. Please refer to the Form 8K filed by the company on May 16th for full details.

Nick: Crucially during the forbearance period Metropolitan has agreed to negotiate in good faith to complete an agreement to transfer our debt position to a new lender and consideration for $20 million.

Nick: And evidence of a minimum of $12 million of operating cost in the company.

Nick: Metropolitan will also receive convertible notes in the company.

Nick: If a transfer of the debt is not completed with forbearance is otherwise terminated the company has agreed to cooperate with metropolitan explored other financial alternatives, including seeking new investors or M&A options.

Nick: Please refer to the form 8-K filed by the company on May 16th for full details.

As we have articulated previously we are singularly focused on creating a capital structure that will position prospects for the future.

Nick: This agreement with metropolitan to explore the transfer of its debt position to a new lender is viewed as a critical step in achieving this outcome. There is substantial work underway from both myself and the board to execute on this in the coming days and weeks.

Nick: Before I get into the business detail I would also like to provide a brief update on the wind down of our heritage touch pay at table business.

Guillaume Lefevre: As has previously been communicated, we have taken the decision to focus all of our efforts and resources on voice AI, and thus made the difficult decision to exit our touch. Over the last few months, we have been executing on that decision and expect to have completed the wind down by the end of next quarter.

Nick: As has previously been communicated we have taken the decision to focus all of our efforts and resources on voice AI and such made the difficult decision to exit our touch business.

Over the last few months, we have been executing on that decision and expect to have completed the wind down by the end of next quarter.

Guillaume Lefevre: This initiative has allowed us to focus the whole team exclusively on one goal, improving our voice AI product, which has led to a greater pace of innovation and progress. It also has significant cost-reduction benefits, which, as we said, are critical as we move forward towards a profitable business model. I will later reference specific advantages or advancements which have been made due to the singular focus, and we are confident as ever that this was the correct strategic decision for the good of the long-term future of Presto. As mentioned above, I would like to spend the remainder of my time detailing the substantial progress we have made across four core areas.

Nick: This initiative has allowed us to focus the whole team exclusively on one goal improving up voice AI product, which has led to a greater pace of innovation and progress.

Nick: It also has significant cost reduction benefits, which as we said are critical as we move forward towards a profitable business model.

Nick: I will later reference specific advantages or advancements, which have been made due to the singular focus we are confident than ever that this was the correct strategic decision at a good at the long term future prospects.

Nick: As referenced above I would like to spend the remainder of my time detailing the substantial progress we have made across four core areas of the business.

Guillaume Lefevre: These are commercial developments, including new logo wins, existing customer expansions, and differentiators in the market. Strategic Product Development, highlighting our latest product innovations and discussing potential opportunities for Presto Voice AI product evolution, and Tactical Product Development, including new features we've recently introduced and product improvements we're already working on. And finally, operations, emphasizing the importance of customer success, support, and our deployment capability. But first, let me discuss commercial and customer development. This is an exciting time.

Nick: These are commercial developments, including new logo wins existing customer expansion and differentiated in the market.

Nick: Strategic product developments, highlighting our latest product innovations and discussing potential opportunities for Presque voice AI product evolution.

Nick: And tactical product development, including New features we recently introduced a product improvements we're already working on.

Nick: And finally operation emphasizing the importance of customer success support and our deployment capability.

Speaker Change: First let me discuss commercial and customer development.

Speaker Change: This is an exciting time for crest data the market opportunity for voice AI remained substantially in the drive through restaurant sector, whether it's.

Guillaume Lefevre: The market opportunity for voice AI remains substantial in the drive-thru restaurant sector, at well over $2.5 billion per year in the US. However, the industry is only just starting to embrace automation. Moreover, due to the underlying complexity of the technology, it is an extremely difficult market for new players to enter, providing those already in the space with a significant advantage. I witnessed firsthand the intricacy involved in integrating into restaurant systems and building one's own AI. These efforts and investments place us at a substantial advantage in terms of our future growth. We believe that these investments in development.

Speaker Change: The $2 $5 billion per year in the U S alone.

Speaker Change: Industry is only just starting to embrace automation with fewer than 1% of U S. Dry trees, having adopted any form of voice AI yet.

Speaker Change: Moreover, due to the underlying complexity of the technology. It is an extremely difficult market for new players to enter providing those already in this space with a significant advantage.

Speaker Change: I witnessed firsthand the intricacies involved in integrating into restaurants system and building one's own AI product. These efforts and investments placed at a substantial advantage in terms of our future growth.

Speaker Change: We believe that through these investments and development press there is ideally suited to address the needs of the middle market restaurant operators, a sector, we announced strategically targeting.

Guillaume Lefevre: Presto is ideally suited to address the needs of the middle market restaurant operators, a sector we are now strategically targeting. With that in mind, I want to address our significant commercial progress over the past. First of all, we are engaged in expanding live deployment among our existing customers. There are currently active expansion negotiations with seven franchise groups, which have nearly 500 total locations to expand to. This is equivalent to nearly $10 million in ARR.

Speaker Change: With that backdrop I want to address a significant commercial progress over the past quarter.

Speaker Change: Festival, we are engaged in expanding life deployments among our existing customers.

Speaker Change: There are currently active expansion negotiations with seven franchise groups, which have nearly 500 total locations to expand too. This is equivalent to nearly $10 million in AI all IRR.

Guillaume Lefevre: I am delighted to report we've also made real strides in expanding our customer base and enhancing our top of funnel pipeline. We currently have successful pilot programs with four well-known QSR brands, which collectively represent 1,300 locations, or approximately $25 million in ARR. Of these four pilots, we just last week signed an MSA with one brand that has approximately 350 locations and has agreed to deploy Presto voice in 25 of their drive-throughs immediately.

Speaker Change: I am delighted to report we've also made real strides in expanding our customer base and enhancing our top of funnel pipeline.

Speaker Change: We currently have successful pilot programs with full well known <unk> brands, which collectively represent 1300 locations or approximately $25 million in <unk>.

Speaker Change: Of these four pilots, we just last week signed an MSA with one brand that has approximately 350 locations and have agreed to deploy presto voice in 25 of that dry trees immediately for.

Guillaume Lefevre: For another operator, we have already deployed Presto voice in seven of its 35 drive-thru stores. We are close to completing MSA negotiations with the other two brands, and we are also in separate new pilot discussions with a major household name. In closing on the commercial front, I'd like to take a step back and rearticulate the core elements of our proposition, which are most attractive to our customers and are driving the commercial success outline.

Speaker Change: For another operator, we have already deployed Presque voice in seven of his 35 drive thru locations. We are close to completing MSA negotiations with the other two brands and we are also in separate new pilot discussions with a major household name brand.

Speaker Change: In closing on the commercial front I'd like to take a step back and re articulate the core elements of our proposition, which are most attractive to our customers and are driving the commercial success outlined above.

Guillaume Lefevre: First, we have the proven ability to integrate into a broad range of customer environments, including four different point of sale systems and customer hardware. This flexibility is crucial in such a fragmented market. Our New Approach to Menu Ingenuity. This is the way in which we take a customer's menu and build it out to link to our AI platform. This will enable us to significantly simplify the menu building process and will deliver a step change in our ability to expand rapidly across multiple brands at the same time. We possess a 10 year track record serving restaurant operators, including corporate owners and their franchises.

Speaker Change: First we have the proven ability to integrate into a broad range of customer environments, including four different point of sales system and the customer hardware. This flexibility is crucial in such a fragmented market.

Speaker Change: Our new approach to menu ingestion.

Speaker Change: This is the way in which we take a customer's menu and build it out to linked to our AI product.

Speaker Change: This will enable us to significantly simplify the menu building process and will deliver a step change in our ability to expand rapidly across multiple brands at the same time.

Speaker Change: We possess a 10 year track record of serving restaurant operators, including corporate owners and that franchise networks, we understand complex customer environments exceptionally well.

Guillaume Lefevre: We understand complex customer environments, et cetera. Moreover, we have proved our ability to deploy, operating at an average rate of around 30 deployments per month from November through February, with a peak of nearly 50 in December. This demonstrates our ability to scale quickly and safely with our partners, even across a range of different point of sale systems and environments. Finally, we've built and own our own proprietary hardware, specifically designed to improve successful and quick integration.

Speaker Change: Moreover, we are.

Speaker Change: Our ability to deploy at Pes operating at an average rate of around 30 deployments per month from November through February with a peak of nearly 50 in December.

Speaker Change: This demonstrates our ability to scale quickly and safely with our partners even across a range of different point of sale systems and environments.

Speaker Change: Finally, we built and own our own proprietary hardware, specifically designed to improve successful and quick integration.

Guillaume Lefevre: Because of these capabilities, we believe we are the only player in the market who has the ability to serve the mid market of North American QS. Other providers do not possess the technology or deployment experience to allow them to expand across multiple different brands with different technology environments and many structures.

Speaker Change: Because of these capabilities. We believe we are the only player in the market you have the ability to serve the mid market in North American <unk> space other providers do not possess the technology all deployment experience to allow them to expand across multiple different brands with different technology environments and many structures.

Guillaume Lefevre: As such, mid-market brands will be a key focus of our short to medium-term growth. We will, of course, continue to build relationships and develop pilots with the largest brands, which will represent a greater proportion of our long-term. In the short to medium term, we anticipate a significant proportion of our deployments will come from these customers in the mid-market, of whom we are part of this building. Second, I would like to outline our strategic product.

Speaker Change: Such men mid market brands will be a key focus of our short to medium term growth plan. We will of course continue to build relationships and develop pilots with the largest brands, which will represent a greater proportion of our long term opportunity in.

Speaker Change: In the shorter to medium term, we anticipate a significant proportion of our deployments will come from these customers in the mid market, whom we are purpose built SaaS.

Speaker Change: Second I would like to outline our strategic product developments.

Guillaume Lefevre: As we disclosed a few weeks ago, we recently launched Presto VoIP Pure AI, a transformational feature that eliminates humans in the loop in an initial test location. Candidly, the technology has performed at a level far above what we had been anticipating, with AI efficiency rising from around 50% to around 80% at the initial test location. We will be expanding PureAI to a greater range of stores over the next few weeks to collect more data. Why is pure AI so exciting?

Speaker Change: As we disclosed a few weeks ago, we have recently launched Presto voice pure AI transformational feature that eliminates humans in the leap and an initial test location.

Speaker Change: Candidly the technology has performed at a level far above what we had been anticipating.

Speaker Change: With AI efficiency rising from around 50% to around 80% at the initial test location will.

Speaker Change: We'll be expanding pure AI to a greater range of stores over the next few weeks to collect more data.

Guillaume Lefevre: Well, we found that humans in the loop often intervene early in the order, before the AI has a chance to complete the order and learn. The pure AI feature enables a smooth transition to the restaurant team member only when the AI determines that it's unable to process an order. We believe that this feature will allow the voice AI system to improve more quickly while still providing the efficiency and level of accuracy we are known for.

Speaker Change: Why pure AI, so exciting well, we found that humans in the loop oftentimes intervene early in the order process before the AI has a chance to complete the order and that the PRA on feature enabled a smooth transition to the restaurant team member only when the AI tab that is unable to process in order we believe that this.

Speaker Change: Feature will allow the voice AI system to improve more quickly while still providing the efficiency and level of accuracy. We are known for.

Guillaume Lefevre: For us, the gradual elimination of humans in the loop will allow us to improve our margins and reach profitability more quickly. I believe humans in the loop will still play a crucial role in our overall solution, but this advancement is testament to the strength of our underlying technology. With this backdrop of our new AI configuration, I do think it would be helpful to explain my vision for the evolution of Presto voice AI's capabilities on the whole. There are effectively five modes of Presto that we can use, Pure AI, where AI leads all the management and does not require any agents. When uncertain, it will just escalate directly.

Speaker Change: For us the gradual elimination of human and the link will allow us to improve our margins and reach profitability more quickly.

Speaker Change: Believe humans in the loop will still play a crucial role in our April solution, but this advancement is testament to the strength of our underlying technology solution.

Guillaume Lefevre: Unsupervised AI, where AI leads order management with agents pulled in from a pool to support if issues emerge. Supervised AI, where AI leads order management with constant oversight from agents in case issues emerge. Agent-led, where remote agents lead our water management use, but using voice AI infrastructure to input the audit. And finally, snooze, a new feature where, if for any reason, the customer would like to take orders manually, they can choose to snooze Presto for a set period of time, say 30 minutes during the rush. In addition to pure AI, we have been focused on developing unsupervised AI.

Speaker Change: With this backdrop of our new AI configuration I do think it would be helpful to explain my vision for the evolution of prestige voice AI capabilities on the hull.

Speaker Change: There are effectively five modes Empress state that we can deploy.

Speaker Change: All right.

Speaker Change: Where AI leads order management and does not require any agents when onset and that was just asked.

Speaker Change: Connect directly to the store.

Speaker Change: On supervised AI.

Speaker Change: AI lead order management with agents who've been from a pool to support <unk>.

Speaker Change: Supervised AI, where AI leads order management with constant oversight from agents in.

Speaker Change: Casey season March eight.

<unk> led where remote patient lead our water management needs.

Speaker Change: But using voice AI infrastructure.

Speaker Change: Orders.

Speaker Change: And finally, a new feature where if for any reason the customer would like to take orders manually. They can choose this news press save for a set period of time say that few minutes during the rush hour.

Speaker Change: In addition to pure AI, we have been focused on developing the unsupervised AI element of inspection and have been Trialing. This an initial test location.

Guillaume Lefevre: Spectrum, and have been trialing this in initial tests. Unsupervised AI also significantly outperformed our expectations, with AI efficiency rising from around 45% to 70% at the initial test. We have demonstrated that agents can successfully join a session already in progress and can help complete tasks that are challenging for the AI. However, initially, we were concerned about the fact that agents couldn't do this consistently, given the lack of time they have to view the order.

Speaker Change: Supervised AI also significantly outperformed our expectations with AI efficiency rising from around 45% to 70% at the initial test locations.

Speaker Change: We have demonstrated the agents can successfully joint session already in progress and can help complete tasks are challenging for the ops.

Speaker Change: Initially we were concerned about the fact the agents Couldnt do this consistently given the lack of time they have to do the order. So it was fantastic to see this level of outperformance.

Guillaume Lefevre: So it was fantastic to see this level of output. We will also be expanding supervised AI to a greater number of stores over the next few days and weeks to collect more data. Over the coming quarters, we will begin to test a single solution that allows for these different modes I outlined to be used at different parts of the day. This initiative allows us to maximize non-intervention and customer satisfaction while improving our margins by optimizing agency. This level of flexibility is not something currently on the market, and it's something that customers have expressed an interest in.

Speaker Change: We will also be expanding on supervised AI to a greater number of stores over the next few days and weeks to collect more data.

Speaker Change: Over the coming quarters, we will begin to test a single solution that allows for these different modes I outlined to be used in different parts of the day.

Speaker Change: This initiative allows us to maximize non intervention and customer satisfaction, while improving our margins by optimizing agent costs.

Speaker Change: This level of flexibility is not something currently on the market and it's something that customers have expressed an interest in it.

Guillaume Lefevre: Last week alone, we received several inbound inquiries from existing customers keen to be part of our trials of these new forms of the product. The testing of this potential end date for Presto Voice will be a landmark moment in the ongoing growth of this business, and I look forward to updating you in due course. The third major topic I wanted to cover was some tactical product development. On the more tactical product front, we continue to develop and deliver new features for customers alongside the more fundamental product strategy outlined above. We recently successfully piloted a Spanish language ordering feature at a location in Southern California, which allows drive-thru customers to easily place orders in Spanish and effortless transition between English and Spanish when necessary.

Speaker Change: Last week alone we received several inbound inquiries from existing customers keen to be part of our trials of these new forms of the product.

The testing of this potential and state compressor voice will be a landmark moment to the ongoing growth of this business and I look forward to updating you in due course.

Speaker Change: The third major topic I wanted to cover with some tactical product developments.

Speaker Change: On a more tactical product front, we continue to develop and deliver new features for customers alongside the more fundamental product strategy outlined above.

Speaker Change: We have recently successfully piloted a Spanish language ordering feature at the location in Southern California, which allows <unk> customers to easily placed orders in Spanish and FSA Leslie transition between English and Spanish when necessary.

Guillaume Lefevre: This new feature allows us to provide a seamless and inclusive experience for this important demographic. We intend to pursue a broader rollout of our Spanish language capability following additional on-site. We are working on a variety of other features to optimize our voice AI and deliver value to our drive-thru customers, including multi-lane support, customisable upsell, next year integration, and further audio improvement. Finally, though, I just want to touch on our approach to, We have renewed our commitment to develop robust customer success and customer support functions as they are critical to the overall effectiveness of Presto Voice for our customers and our ability to scale.

Speaker Change: New feature allows us to provide a seamless and inclusive experience for this important demographic, we intend to pursue a broader rollouts of our Spanish language capability following additional onsite testing.

Speaker Change: We are working on a variety of other features to optimize our voice AI platform and deliver value to our drive thru customers, including Multilane support customizable upsell next year integration and further audio improvement.

Speaker Change: Finally, though I just want to touch on our approach to operations.

Speaker Change: We have renewed our commitment to develop a robust customer success and customer support functions as they are critical to the overall effectiveness of prestige voice for our customers and our ability to scale this business.

Guillaume Lefevre: We have invested in and will continue to invest heavily in this important area of our business. I personally view customer success as a fundamental part, which has the ability to further differentiate us in this. We've implemented a much more streamlined and integrated customer support process that enables customers to easily report issues and obtain immediate assistance from Presto. We are focused on integrating customer support with the engineering and product teams to triage and prioritize issues and solve them more.

Speaker Change: We have invested and will continue to invest heavily behind this important area of our company I personally view customer success, the fundamental parts of the product, which has the ability to further differentiate us in this market.

Speaker Change: We have implemented a much more streamlined and integrated customer support process that enables customers to easily report issues and obtain immediate assistance from the prostate team.

Speaker Change: We are focused on integrating customer support with the engineering and product teams to triage and prioritize issues solve them more quickly.

Guillaume Lefevre: With the proper customer support, our customers achieve significantly higher non-interference. Over the past several quarters, we've demonstrated that we have the ability to deploy new locations at a rapid pace and have refined our hardware to further improve our install success rates. We feel confident in our team's ability to continue to expand our live locations during the next few months. In summary, we believe this market is there for us. We've invested heavily in the fundamental product advancements required to serve our customers.

Speaker Change: The proper customer support our customers achieve significantly higher non intervention rates.

Speaker Change: Over the past several quarters, we have demonstrated that we have the ability to deploy new cases, new locations at a rapid pace and have refined our hardware to further improve our in store success rate, we feel confident in our team's ability to continue to expand our life locations during the next quarters.

Speaker Change: In summary, we believe this market is there for us to capture we've invested heavily in the fundamental product enhancements required to service our customers.

Guillaume Lefevre: We are now executing on driving continued commercial momentum in the coming weeks and months. With that, I'd like to hand it over to our Interim Chief Financial Officer, Stanley, to review our financial performance for Q3 2021.

Speaker Change: Now executing on driving continued commercial momentum in the coming weeks and months.

Speaker Change: With that I'd like to hand, it over to our interim Chief Financial Officer Stanley to review, our financial performance for Q3 2024.

Stanley Mbugua: Thank you, Guy. And once again, thank you, everyone, for joining us today. It is a pleasure speaking to you today as the Interim Chief Financial Officer. This is my second year at Presto, and prior to my current role, I was the Chief Accounting Officer at the company. Today, I will walk you through our fiscal third quarter results and then cover our guidance for the fiscal fourth quarter of 2024. I'll talk about certain results on a non-cap basis.

Stanley Mbugua: Thank you and once again, thank you everyone for joining us today. It is a pleasure speaking to you today as the interim Chief Financial Officer. This is my second year Presto and prior to my current role I've been the Chief Accounting officer at the company.

Stanley Mbugua: And in that case, we show reconciliation to gap measures in a recent press release, which is available in the investor relations section of our website at presto.com. We have taken a number of strategic steps over the past year to reduce operating expenses and cash, in particular the wind-down of the Heritage Touch business which Guy mentioned earlier. We will continue to focus on closely managing our headcount and vendor costs, along with streamlining our operations, to allow us to maximize the rollout of new voice AI.

Stanley Mbugua: For the fiscal third quarter of 2024, we reported revenue of $4.5 million compared to $6.6 million for Q3 of the prior year. This quarter's revenue comprised platform revenue of $2.2 million and transaction revenue of $2.3 million. Q3 fiscal 2024 operating expenses were $15.5 million compared to $15 million for Q3 in the prior year. This modest increase of $0.5 million was driven by higher generated administrative expenses of $3.3 million, offset by lower research and development costs of $2.8 million.

Today, I will walk you through our fiscal third quarter results.

Stanley Mbugua: And then cover guidance for fiscal fourth quarter of 2024.

Stanley Mbugua: I would talk about certain results on a non-GAAP basis.

Stanley Mbugua: And in that case, we show a reconciliation to GAAP measures in our recent press release, which is available in the Investor Relations section.

Stanley Mbugua: Of our website at <unk> com.

Speaker Change: We have taken a number of strategic steps over the past year to reduce operating expenses and cash burn in particular, the wind down of the heritage touch business, which Dave mentioned earlier.

Speaker Change: We will continue to focus on closely managing our head count in vendor costs, along with the streamlining of our operations to allow us to maximize the rollout of new voice AI and locations.

Stanley Mbugua: Sales and marketing expenses were virtually flat year-over-year. However, research and development expenses decreased 52% to $2.7 million in Q3 fiscal 2024 as compared to 5.4 million dollars for Q3 in the prior year. That was primarily due to lower payroll costs and stock-based compensation expenses resulting from a reduced hedge. Sales and marketing expenses were $2 million in Q3 fiscal 2024, virtually flat as compared to Q3 of the prior year. In contrast, general and administrative expenses increased 45% to $10.8 million for Q3 fiscal 2024, as compared to $7.4 million for Q3 of the prior year.

Speaker Change: For the fiscal third quarter of 2024, we reported revenue of $4 $5 million compared to $6 $6 million for Q3 in the prior year.

Speaker Change: This quarter's revenue comprise platform revenue of $2 2 million and transaction revenue of $2 $3 million.

Speaker Change: Q3 fiscal 2024 operating expenses were $15 5 million compared to $15 million for Q3 in the prior year.

Speaker Change: This modest increase of $5 five.

Speaker Change: $5 million was driven by higher general administrative expenses of $3 3 million orders.

Speaker Change: Offset by lower research and development costs of $2 8 million sales and marketing expenses were virtually flat year over year.

Speaker Change: Research and development expenses decreased 52% to $2 $700 million.

Speaker Change: In Q3 fiscal 2024 as compared to $5 4 million for Q3 in the prior year.

Speaker Change: Now lets primarily due to lower payroll costs and stock based compensation expenses, resulting from reduced head count sales.

Speaker Change: Sales and marketing expenses were $2 million in Q3 fiscal 2020 for virtually flat as compared to Q3 of the prior year.

In contrast <unk>.

Speaker Change: General and administrative expenses increased 45% to $10 8 million for Q3 fiscal 2024.

Speaker Change: As compared to $7 $4 million for Q3 in the prior year.

Speaker Change: The increase was primarily due to higher professional fees for legal audit and public company compliance costs.

Speaker Change: Adjusted EBITDA for the quarter was a loss of $12 2 million compared to a loss of $9 $7 million in the same quarter last year.

Stanley Mbugua: The increase was primarily due to higher professional fees for legal, audit, and public company compliance. Adjusted EBITDA for the quarter was a loss of $12.2 million compared to a loss of $9.7 million in the same quarter last year. Now I would like to finish with our guidance for our fourth quarter. We expect fiscal fourth quarter 2024 revenue to be between $1.6 million and $1.9 million.

Speaker Change: Now I would like to finish with our guidance for fourth quarter.

Speaker Change: We expect fiscal fourth quarter 2020 for revenue to be between $1 $6 million and $1 $9 million.

Stanley Mbugua: That concludes our prepared remarks. Thank you all for joining us today, and we look forward to continuing the dialogue as we move through the remainder of Cisco 2024. With that, Guy and I are ready to take your questions. Operator, please open up the lines for... Certainly, ladies and gentlemen, if you do have a question at

Speaker Change: That concludes our prepared remarks. Thank you all for joining us today, and we look forward to continuing the dialogue.

Speaker Change: As we move through the remainder of fiscal 2024.

Speaker Change: With that he and I are ready to take your questions. Operator, Please open up the lines for any questions certainly ladies and gentlemen, if you do have a question at this time. Please press star one on your telephone. If your question has been answered and you'd like to remove yourself from the queue simply press star one again, one moment for our first question.

Yes.

Speaker Change: Yes.

Speaker Change: And once again, if you have a question at this time. Please press star one on your telephone.

Speaker Change: And I'm not showing any questions in the queue at this time.

Speaker Change: Okay.

Speaker Change: This does conclude the question and answer session as well as today's program. Thank you, ladies and gentlemen for your participation you may now disconnect. Good day.

Speaker Change: [music].

Operator: This does conclude the question and answer session, as well as today's program. Thank you, ladies and gentlemen, for your participation. You may now disconnect.

Speaker Change: Greetings and welcome to <unk> financial third quarter 2024 earnings call. As a reminder, this conference is being recorded it is now my pleasure to introduce your host Chris cast you may begin.

Operator: Good day. I'm going to be. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. ?? ?? ?? ?? ?? ?? ?? ?? ?? Greetings and welcome to Presto's Financial Third Quarter 2024 Earnings Call. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Chris Kass. You may begin. Good afternoon.

Speaker Change: Good afternoon, everyone I'd like to welcome all of you to press those fiscal third quarter 2024 earnings call.

Speaker Change: Today's call will include prepared remarks from our interim Chief Executive Officer, Steve <unk>, and our interim Chief Financial Officer Stanley Mbugua.

Chris Kass: Before we begin, I'd like to remind everyone that during today's call, we will be making forward-looking statements regarding future events and financial performance, including our guidance for Presto's fiscal fourth quarter of 2021. These forward-looking statements are subject to known and unknown risks and uncertainties, and cautions that these statements are not guarantees of future performance. We encourage you to review our most recent reports or any applicable filings for a complete discussion of these factors and other risks that may affect our future results or the market price of our stock.

Speaker Change: Before we begin I would like to remind everyone that during today's call, we will be making forward looking statements regarding future events and financial performance, including our guidance for <unk> fiscal fourth quarter of 2020 for these.

Speaker Change: These forward looking statements are subject to known and unknown risks and uncertainties.

Speaker Change: <unk> cautions that these statements are not guarantees of future performance.

Speaker Change: Finally, we're not obligating ourselves to revise our results or these forward looking statements in light of new information or future events.

Speaker Change: During today's call, we will refer to certain non-GAAP financial measures reconciliations of non-GAAP to GAAP measures and certain additional information are included in the press release.

Speaker Change: This press release can be viewed and downloaded from our website.

Guillaume Lefevre: Thank you Chris for the introduction and thank you everyone for joining the call. It's my pleasure to speak to you today for the first time as the CEO of Presto. While I only assumed this role a little over three months ago, I've been working with Presto in a variety of capacities for over a year and, therefore, already have deep experience of the company and its potential. By way of some brief background, I have extensive experience working with some of the world's largest restaurant chains on commercial and operational issues. And so I have a deep understanding of what matters to our customers.

Speaker Change: Thank you Chris for the introduction and thank you everyone for joining the call.

Speaker Change: It's my pleasure to speak to you today for the first time.

Speaker Change: Good day.

Speaker Change: While I only assume this role of it later three months ago, I've been working with Presto and a variety of capacities over a year and therefore already has deep experience to the company and its potential.

Speaker Change: By way of some be brief background I have extensive experience working with some of the world's largest restaurant chains on commercial and operational issues and so I have a deep understanding of what matters to our customers.

Guillaume Lefevre: My personal focus will always be on the customer, commercial, and strategic elements of this business, while I will work closely with our excellent engineering, product, and operational leaders to deliver in those areas. In this, my first earnings school, I wanted to spend a majority of the time updating you all on the business and operational progress we have made since I assumed my role, which includes some new approaches and how these initiatives position us for the future.

Guillaume Lefevre: First, however, I need to review Presto's current financial situation. We recently made several public statements relating to our plans for the coming months in relation to financing. I wish to address and recap these before moving on to the business itself. On May 20th, 2024, we completed a financing of $3 million in common equity and subordinated debt from various parties, including our existing investor, Remus Castle. In conjunction with this financing, Presto's principal senior secured lender, Metropolitan Partners, agreed to extend forbearance with respect to existing defaults under the company's credit facility until June 15th, 2021.

Nick: First however, I need to review <unk> current financial position.

Nick: We recently made several public statements relating to our plans for the coming months in relation to financing I wish to address and recap these before moving on to the business itself.

Nick: On May 22024, we completed a financing of $3 million in common equity and subordinated debt from various parties, including our existing investor remit capital.

In conjunction with this financing press states principal senior secured lender metropolitan pop as great a great to extend forbearance with respect to existing defaults under the Companys credit facility until June 15 2024.

Nick: The capital raise raised together with cash on hand, and projected revenues is expected to be sufficient to finance the company through June 15 2024.

Nick: Metropolitan has agreed to further extend forbearance until July 15, 2024, if the company raised its $3 million in additional equity by June seven this year.

Guillaume Lefevre: Crucially, during this forbearance period, Metropolitan has agreed to negotiate in good faith to complete an agreement to transfer its debt position to a new lender in consideration for $20 million and evidence of a minimum of $12 million of operating capital in the company. Metropolitan will also receive convertible notes in the company. If a transfer of the debt is not completed, or if forbearance is otherwise terminated, the company has agreed to cooperate with Metropolitan as it explores its other financial alternatives, including seeking new investors or M&A options. Please refer to the Form 8K filed by the company on May 16th for full details.

Speaker Change: <unk> will also receive convertible notes in the company.

Speaker Change: If a transfer of the debt is not completed with forbearance is otherwise terminated the company has agreed to cooperate with metropolitan asset explored other financial alternatives, including seeking new investors or M&A options.

Speaker Change: Please refer to the form 8-K filed by the company on May 16th for full details.

Guillaume Lefevre: As we have articulated previously, we are singularly focused on creating a capital structure that will position Presto for the future. This agreement with Metropolitan to explore the transfer of its debt position to a new lender is viewed as a critical step in achieving this outcome. There is substantial work underway from both myself and the board to execute on this in the coming days and weeks. Before I get into the business details, I would also like to provide a brief update on the winding down of our Heritage Touch pay at table. As has previously been communicated, we have taken the decision to focus all of our efforts and resources on voice AI, and thus made the difficult decision to exit our touch. Over the last few months, we have been executing on that decision and expect to have completed the wind down by the end of next quarter.

Speaker Change: As we have articulated previously we are singularly focused on creating a capital structure that will position <unk> for the future.

Speaker Change: This agreement with metropolitan to explore the transfer of its debt position to a new lender is viewed as a critical step in achieving this outcome. There is substantial work underway from both myself and the board to execute on this in the coming days and weeks.

Speaker Change: Before I get into the business detail I would also like to provide a brief update on the wind down of our heritage touch pay at table business.

Speaker Change: As has previously been communicated we have taken the decision to focus all of our efforts and resources on voice AI and such made the difficult decision to exit our touch business.

Speaker Change: For the last few months, we have been executing on that decision and expect to have completed the wind down by the end of next quarter.

Speaker Change: This initiative has allowed us to focus the whole team exclusively on one goal improving up voice AI product, which has led to a greater pace of innovation and progress.

Speaker Change: It also has significant cost reduction benefits, which as we said are critical as we move forward towards a profitable business model.

Speaker Change: I will later reference specific advantages or advancement, which have been made due to the singular focus we are confident than ever that this is the correct strategic decision for the good of the long term future Presto.

Speaker Change: As referenced above I would like to spend the remainder of my time detailing the substantial progress we have made across four core areas of the business.

Guillaume Lefevre: These are commercial developments, including new logo wins, existing customer expansions, and differentiators in the market. Strategic Product Development, highlighting our latest product innovations and discussing potential opportunities for Presto Voice AI product evolution, and Tactical Product Development, including new features we've recently introduced and product improvements we're already working on. And finally, operations, emphasizing the importance of customer success, support, and our deployment capability. First, let me discuss commercial and customer development. This is an exciting time.

Speaker Change: These are commercial developments, including new logo wins existing customer expansion and differentiated in the market.

Speaker Change: Strategic product developments, highlighting our latest product innovation and discussing potential opportunities suppressive voice AI productivity.

Speaker Change: And tactical product development, including New features we recently introduced a product improvements we're already working on.

Speaker Change: And finally operations emphasizing the importance of customer success support and our deployment capability.

Speaker Change: First let me discuss commercial and customer development.

Speaker Change: This is an exciting time for crest data the market opportunity for voice AI remained substantially in the drive through restaurant sector, well over $2 $5 billion per year in the U S alone.

Guillaume Lefevre: The market opportunity for voice AI remains substantial in the drive-thru restaurant sector, at well over $2.5 billion per year in the U.S., but the industry is only just starting to embrace automation. If you are among the 1% of US drive-thrus having adopted any form of voice AI yet, you are already ahead. Moreover, due to the underlying complexity of the technology, it is an extremely difficult market for new players to enter, providing those already in the space with a significant advance.

Speaker Change: The industry is only just starting to embrace automation with fewer than 1% of U S. Dry trees, having adopted any form of voice AI yet.

Guillaume Lefevre: I witnessed firsthand the intricacy involved in integrating into restaurant systems and building one's own AI. These efforts and investments place us at a substantial advantage in terms of our future growth. We believe that these investments in development.

Speaker Change: Witness firsthand the intricacy involved in integrating into restaurant systems and building one's own AI product. These efforts and investments placed at a substantial advantage in terms of our future growth.

Speaker Change: We believe that through these investments and development, Chris there is ideally suited to address the needs of the middle market restaurant operators, a sector, we announced strategically targeting.

Guillaume Lefevre: Presto is ideally suited to address the needs of middle market restaurant operators, a sector we are now strategically targeting. With that in mind, I want to address our significant commercial progress over the past. First of all, we are engaged in expanding live deployment among our existing customers. There are currently active expansion negotiations with seven franchise groups, which have nearly 500 total locations to expand to. This is equivalent to nearly $10 million in ARR.

Speaker Change: With that backdrop I want to address a significant commercial progress over the past quarter.

Speaker Change: First of all we are engaged in expanding life deployments among our existing customers.

Speaker Change: There are currently active expansion negotiations with seven franchise groups, which have nearly 500 total locations to expand too. This is equivalent to nearly $10 million in AI.

Speaker Change: Al.

Speaker Change: I am delighted to report we've also made real strides in expanding our customer base and enhancing our top of funnel pipeline.

Speaker Change: We currently have successful pilot programs with full well <unk> brands, which collectively represent 1300 locations or approximately $25 million in <unk>.

Speaker Change: These four pilots, we just last week signed an MSA with one brand that has approximately 350 locations and have agreed to deploy presto voice in 25 of that dry <unk> immediately.

Guillaume Lefevre: For another operator, we have already deployed Presto voice in seven of its 35 drive-throughs. We are close to completing MSA negotiations with the other two brands, and we are also in separate new pilot discussions with a major household name. In closing on the commercial front, I'd like to take a step back and rearticulate the core elements of our proposition, which are most attractive to our customers and are driving the commercial success outline.

Speaker Change: In closing on the commercial front I'd like to take step back and re articulate the core elements of our proposition, which are most attractive to our customers and are driving the commercial success outlined above.

Guillaume Lefevre: First, we have the proven ability to integrate into a broad range of customer environments, including four different point of sale systems and customer hardware. This flexibility is crucial in such a fragmented market and our new approach to menus in general. This is the way in which we take a customer's menu and build it out to link to our AI. This will enable us to significantly simplify the menu building process and will deliver a step change in our ability to expand rapidly across multiple brands at the same time. We possess a 10 year track record of serving restaurant operators, including corporate owners and their franchises.

Speaker Change: First we have the proven ability to integrate into a broad range of customer environments, including four different point of sale system and the customer hardware.

Speaker Change: Flexibility is crucial in such a fragmented market.

Speaker Change: Our new approach to menu ingestion.

Speaker Change: This is the way in which we take a customer's menu and build it out to linked to our AI product.

Speaker Change: This will enable us to significantly simplify the menu building process and will deliver a step change in our ability to expand rapidly across multiple brands at the same time.

We possess a 10 year track record of serving restaurant operators, including corporate owners and that franchise networks, we understand complex customer environments exceptionally well.

Guillaume Lefevre: We understand complex customer environments, et cetera. Moreover, we have proved our ability to deploy it, operating at an average rate of around 30 deployments per month from November through February, with a peak of nearly 50 in December.

Speaker Change: Moreover, we have proved our ability to deploy at Pes operating at an average rate of around 30 deployments per month from November through February with a peak of nearly 50 in December.

Guillaume Lefevre: This demonstrates our ability to scale quickly and safely with our partners, even across a range of different point of sale systems and environments. Finally, we've built and own our own proprietary hardware, specifically designed to improve successful and quick integration. Because of these capabilities, we believe we are the only player in the market who has the ability to serve the mid-market of the North American jewel. Other providers do not possess the technology or deployment experience to allow them to expand across multiple different brands with different technology environments and many structures.

Speaker Change: Demonstrates our ability to scale quickly and safely with our partners even across a range of different point of sale systems and environments.

Finally, we built and own our own proprietary hardware, specifically designed to increase successful and quick integration.

Speaker Change: Because of these capabilities. We believe we are the only player in the market you have the ability to serve the mid market within North America <unk> space other providers do not possess the technology all deployment experience to allow them to expand across multiple different brands with different technology environments and many structured as.

Speaker Change: As such many mid market brands will be a key focus of our short to medium term growth plan. We will of course continue to build relationships and develop pilots with the largest brands, which will represent a greater proportion of our long term opportunity in the shorter to medium term, we anticipate a significant proportion of our deployments will come from these customers in the mid market.

Speaker Change: Whom we are purpose built SaaS.

Speaker Change: Second I would like to outline our strategic product developments.

Guillaume Lefevre: As we disclosed a few weeks ago, we recently launched Presto VoIP Pure AI, a transformational feature that eliminates humans in the loop in an initial test location. Candidly, the technology has performed at a level far above what we had been anticipating, with AI efficiency rising from around 50% to around 80% at the initial test location. It will be expanding pure AI to a greater range of stores over the next few weeks to collect more data. Why is pure AI so exciting?

Speaker Change: As we disclosed a few weeks ago, we have recently launched Presto voids pure AI.

Speaker Change: Transformational feature that eliminates humans in the leap and an initial test location.

Speaker Change: The technology has performed at a level far above what we had been anticipating with AI efficiency rising from around 50% to around 80% at the initial test locations.

Speaker Change: We'll be expanding pure AI to a greater range of stores over the next few weeks to collect more data.

Speaker Change: Why is pure AI, so exciting well we found that humans in the loop oftentimes intervene early in the order process before the AI has a chance to complete the order and lap the PRA on feature enabled a smooth transition to the restaurant team member only when the AI tab that is unable to process in order, we believe that this fee.

Speaker Change: Feature will allow the voice AI system to improve more quickly while still providing the efficiency and level of accuracy. We are 94.

Speaker Change: For us the gradual elimination of human and the link will allow us to improve our margins and reach profitability more quickly.

Speaker Change: I believe humans in the loop.

Speaker Change: Still play a crucial role in our April solution, but this advancement is testament to the strength of our underlying technology solution.

Speaker Change: With this backdrop of our new AI configuration I do think it would be helpful to explain my vision for the evolution of Presto voice AI capabilities on the whole.

Guillaume Lefevre: There are effectively five modes of Presto that we can deploy. Pure AI, where AI leads all the management and does not require any agents. When uncertain, it will just escalate to Unsupervised AI, where AI leads order management with agents pulled in from a pool to support if issues emerge. Supervised AI, where AI leads order management with constant oversight from agents in case there are problems. Agent-led, where remote agents lead our water management use, but using voice AI infrastructure to input the audio.

Speaker Change: There are effectively five modes Empress state that we can deploy.

Pure AI.

Speaker Change: AI leads order management and does not require any agents when onset and that will just escalate directly to the store.

Speaker Change: Supervised AI.

Speaker Change: AI lead order management with agents who've been from a pool to support <unk>.

Speaker Change: Supervised AI, where AI leads order management with constant oversight from agents.

Speaker Change: <unk> eight.

Speaker Change: Agent Med, where remote patient lead our water management needs.

Speaker Change: Using voice AI infrastructure.

Speaker Change: The orders.

Guillaume Lefevre: And finally, Snooze, a new feature where, if for any reason, the customer would like to take orders manually, they can choose to snooze Presto for a set period of time, say 30 minutes during the rush. In addition to pure AI, we have been focused on developing unsupervised AI. Unsupervised AI also significantly outperformed our expectations, with AI efficiency rising from around 45% to 70% at the initial test. We have demonstrated that agents can successfully join a session already in progress and can help complete tasks that are challenging for the AI. However, initially, we were concerned about the fact that agents couldn't do this consistently, given the lack of time they have to view the order.

Speaker Change: And finally snooze, a new feature where if for any reason the customer would like to take orders manually. They can choose to news press say for a set period of time say 30 minutes during the rush hour.

Speaker Change: In addition to pure AI, we have been focused on developing the unsupervised AI element of the spectrum and had been Trialing. This an initial test locations.

Speaker Change: Can supervise AI also significantly outperformed our expectations with AI efficiency rising from around 45% to 70% at the initial test locations.

Speaker Change: We have demonstrated the agents can successfully joint session already in progress and can help complete tasks are challenging for the ops.

Speaker Change: Initially we were concerned about the fact the agents Couldnt do this consistently given the lack of time they have to view the order. So it was fantastic to see this level of outperformance.

Guillaume Lefevre: So it was fantastic to see this level of output. We will also be expanding supervised AI to a greater number of stores over the next few days and weeks to collect more data. Over the coming quarters, we will begin to test a single solution that allows for these different modes I outlined to be used at different parts of the day. This initiative allows us to maximize non-intervention and customer satisfaction while improving our margins by optimizing. This level of flexibility is not something currently on the market, and it's something that customers have expressed an interest in.

Speaker Change: We will also be expanding on supervised AI to a greater number of stores over the next few days and weeks to collect more data.

Speaker Change: Over the coming quarters, we will begin to test a single solution that allows for these different modes I outlined to be used in different parts of the day.

Speaker Change: This initiative allows us to maximize non-intervention and customer satisfaction, while improving our margins by optimizing agent costs.

Speaker Change: This level of flexibility is not something currently on the market and it's something that customers have expressed an interest in.

Speaker Change: Last week alone we received several inbound inquiries from existing customers keen to be part of our trials of these new forms of the product.

Speaker Change: The testing of this potential and state compressor voice will be a landmark moment in the ongoing growth of this business and I look forward to updating you in due course.

Speaker Change: The third major topic I wanted to cover with some tactical product developments.

Guillaume Lefevre: On the more tactical product front, we continue to develop and deliver new features for customers alongside the more fundamental product strategy outlined above. We recently successfully piloted a Spanish language ordering feature at a location in Southern California, which allows drive-thru customers to easily place orders in Spanish and effortless transition between English and Spanish when necessary. This new feature allows us to provide a seamless and inclusive experience for this important demographic. We intend to pursue a broader rollout of our Spanish language capability following additional on-site. We are working on a variety of other features to optimize our voice AI and deliver value to our drive-thru customers, including multi-lane support, customisable upsell, Nexio integration, and further audio improvement.

Speaker Change: The more tactical product front, we continue to develop and deliver new features for customers alongside the more fundamental product strategy outlined above.

Speaker Change: We recently successfully piloted a Spanish language ordering feature at a location in southern California, which allows drive thru customers to easily placed orders in Spanish and FSS Leslie transition between English and Spanish when necessary.

Guillaume Lefevre: Finally, though, I just want to touch on our approach to, We have renewed our commitment to develop robust customer success and customer support functions as they are critical to the overall effectiveness of Presto Voice for our customers and our ability to scale. We have invested and will continue to invest heavily in this important area of our. I personally view customer success as a fundamental part which has the ability to further differentiate us in this. We've implemented a much more streamlined and integrated customer support process that enables customers to easily report issues and obtain immediate assistance from Presto.

Speaker Change: Finally, though I just wanted to touch on our approach to operations.

Speaker Change: We have renewed our commitment to develop a robust customer success and customer support functions as they are critical to the overall effectiveness of prostate voice for our customers and our ability to scale this business.

Speaker Change: We have invested and will continue to invest heavily behind this important area of our company I personally view customer success as a fundamental part of the product, which has the ability to further differentiate us in this market.

Speaker Change: We have implemented a much more streamlined and integrated customer support process that enables customers to easily report issues and obtain immediate assistance from the press.

Guillaume Lefevre: We are focused on integrating customer support with the engineering and product teams to triage and prioritize issues and solve them more. With the proper customer support, our customers achieve significantly higher non-internet. Over the past several courses, we've demonstrated that we have the ability to deploy new locations at a rapid pace, and have refined our hardware to further improve our install success rates. We feel confident in our team's ability to continue to expand our live locations over the next few months.

Speaker Change: We are focused on integrating customer support with the engineering and product teams to triage and prioritize issues solve them more quickly.

Speaker Change: With the proper customer support our customers achieve significantly higher non intervention rates.

Over the past several quarters, we have demonstrated that we have the ability to deploy new cases, new locations at a rapid pace and have refined our hardware to further improve our in store success rates, we feel confident in our team's ability to continue to expand our life locations during the next quarters.

Guillaume Lefevre: In summary, we believe this market is there for us. We've invested heavily in the fundamental product advancements required to service our customers, and we are now executing on driving continued commercial momentum in the coming weeks and months. With that, I'd like to hand it over to our Interim Chief Financial Officer, Stanley, to review our financial performance for Q3 2021.

Speaker Change: In summary, we believe this market is there for us to capture.

Speaker Change: We've invested heavily in the fundamental product in Boston required to service our customers.

Speaker Change: We're now executing on driving continued commercial momentum in the coming weeks and months.

Speaker Change: With that I'd like to hand, it over to our interim Chief Financial Officer Stanley to review, our financial performance for Q3 2024.

Stanley Mbugua: Thank you.

Stanley Mbugua: Again, thank you everyone for joining us today. It is a pleasure speaking to you today as the interim Chief Financial Officer. This is my second Presto and prior to my current role I've been the Chief Accounting officer at the company.

Stanley Mbugua: Today, I will walk you through our fiscal third quarter results.

Stanley Mbugua: And then cover our guidance for fiscal fourth quarter of 2024.

Stanley Mbugua: I would talk about certain results on a non-GAAP basis.

Stanley Mbugua: And in that case, we show a reconciliation to GAAP measures in our recent press release, which is available in the Investor Relations section.

Stanley Mbugua: Of our website at <unk> com.

Stanley Mbugua: We have taken a number of strategic steps over the past year to reduce operating expenses and cash burn and.

Speaker Change: The wind down of the heritage touch business, which Dave mentioned earlier.

Stanley Mbugua: For the fiscal third quarter of 2024, we reported revenue of $4.5 million compared to $6.6 million for Q3 in the prior year. This quarter's revenue comprised platform revenue of $2.2 million and transaction revenue of $2.3 million. Q3 fiscal 2024 operating expenses were $15.5 million compared to $15 million for Q3 in the prior year. This modest increase of $0.5 million was driven by higher generated administrative expenses of $3.3 million, offset by lower research and development costs of $2.8 million. Sales and marketing expenses were virtually flat year-over-year.

Speaker Change: For the fiscal third quarter of 2024, we reported revenue of $4 $5 million compared to $6 $6 million for Q3 in the prior year.

Speaker Change: This quarter's revenue comprise platform revenue of $2 2 million and transaction revenue of $2 $3 million.

Speaker Change: Q3 of fiscal 2024 operating expenses were $15 $5 million.

Speaker Change: $15 million for Q3 in the prior year.

Speaker Change: This modest increase of $5.

Speaker Change: $5 million was driven by higher general administrative expenses of $3 $3 million.

Speaker Change: Offset by lower research and development costs of $2 8 million sales and marketing expenses were virtually flat year over year.

Stanley Mbugua: Research and development expenses decreased 52% to $2.7 million in Q3 fiscal 2024 as compared to $5.4 million for Q3 in the prior year. That was primarily due to lower payroll costs. Stock-based compensation expenses resulting from the reduced hedge. Sales and marketing expenses were $2 million in Q3 fiscal 2024, virtually flat as compared to Q3 of the prior year. In contrast, general and administrative expenses increased 45% to $10.8 million for Q3 fiscal 2024, as compared to $7.4 million for Q3 in the prior year. The increase was primarily due to higher professional fees for legal, audit, and public company compliance.

Speaker Change: Research and development expenses decreased 52% to $2 $7 million.

Speaker Change: In Q3 fiscal 2024 as compared to $5 4 million for Q3 in the prior year.

Speaker Change: That was primarily due to lower payroll costs and stock based compensation expenses, resulting from reduced head count sales.

Speaker Change: Sales and marketing expenses of about $2 million in Q3 fiscal 2020 for virtually flat as compared to Q3 of the prior year.

Speaker Change: In contrast, general and administrative expenses increased 45% to $10 8 million for Q3 fiscal 2024.

Speaker Change: As compared to $7 $4 million for Q3 in the prior year.

Speaker Change: The increase was primarily due to higher professional fees for legal audit and public company compliance costs.

Stanley Mbugua: Adjusted EBITDA for the quarter was a loss of $12.2 million compared to a loss of $9.7 million in the same quarter last year. Now I would like to finish with our guidance for the fourth quarter. We expect fiscal fourth-quarter 2024 revenue to be between $1.6 million and $1.9 million. That concludes our prepared remarks. Thank you all for joining us today, and we look forward to continuing the dialogue as we move through the remainder of Cisco 2024. With that, Guy and I are ready to take your questions. Operator, please open up the lines for me.

Speaker Change: Adjusted EBITDA for the quarter was a loss of $12 $2 million compared to a loss of $9 $7 million in the same quarter last year.

Speaker Change: Now I would like to finish with our guidance for fourth quarter.

Speaker Change: We expect fiscal fourth quarter 2020 for revenue to be between $1 $6 million and $1 $9 million.

Speaker Change: That concludes our prepared remarks. Thank you all for joining us today, and we look forward to continuing the dialogue as we move through the remainder of fiscal 2024.

Operator: Certainly, ladies and gentlemen, if you do have a question at this time, please press star one one on your telephone. If your question has been answered, and you'd like to remove yourself from the queue, simply press star one one again. One moment for our first question. Transcribed by https://otter.ai. And once again, if you have a question at this time, please press star one one on your telephone. And I'm not showing any questions in the queue at this time. This does conclude the question and answer session, as well as today's program. Thank you, ladies and gentlemen, for your participation. You may now disconnect. Good day.

Operator: Certainly, ladies and gentlemen, if you do have a question at the end of the day, please let us know. Thank you.

Speaker Change: Yes.

Speaker Change: And once again, if you have a question at this time. Please press star one on your telephone.

Speaker Change: Okay.

Speaker Change: And I'm not showing any questions in the queue at this time.

Okay.

Speaker Change: This does conclude the question and answer session as well as today's program. Thank you, ladies and gentlemen for your participation you may now disconnect. Good day.

Q3 2024 Presto Automation Inc Earnings Call

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